eToro, the trading and investing platform, has partnered with Arabesque AI, an investment advisory and technology company, to launch a new Sharia-compliant portfolio for users across the Middle East.
ShariaAl-Growth, the new eToro portfolio, leverages technology from Arabesque AI, as well as its bank of environmental, social, and governance (ESG) data, to identify high-growth US stocks that comply with Sharia principles.
“Since our launch in the UAE six months ago, our goal has been to tailor our services to meet the evolving needs of our users in the region,” explained George Naddaf, GCC and MENA regional manager at eToro. “Our recent survey of retail investors in the UAE found that 84 per cent consider ESG factors before investing, with 35 per cent emphasising the importance of their investments being Sharia-compliant.”
Sharia-compliant investment products have provided competitive returns over the long term. The S&P 500 Shariah Index returned 14.25 per cent per year for the 10 years to the end of March 2024, compared to 12.96 per cent per year for the regular S&P 500 Index.
The ShariaAI-Growth portfolio currently comprises up to 40 US equities: From the pool of US stocks available on the eToro platform, only those with a market cap of over $1billion and an average daily trading volume of over $10 million are eligible.
All eligible stocks then have to pass a business activities screen and financial ratio screens to guarantee their compliance with Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) Sharia principles.
Finally, the compliant stocks are evaluated with Arabesque’s AI technology to select those with the highest expected returns, strong earnings growth over the previous 12 months and high ESG scores to be included in the final portfolio.
Initial investment starts from $500 and investors can access tools and charts to track the portfolio’s performance, while eToro’s social feed will keep them up-to-date on developments in the sector.